Social media: Time for reporters to join the conversation

Avoiding social media isn’t just virtually impossible these days, it’s a riskier stance than taking the plunge, say Sean Mahdi and Gorham Palmer

Social media is widely credited with helping to bring about major changes in the way that businesses and their stakeholders interact with each other, whether they are consumers, investors, regulators or commentators. Technology is the enabler, but the success of social media lies in the desire to have conversations. And these conversations are public, which calls for a whole new level of transparency.

Corporations that plan and manage their social media presence can address their stakeholders’ demands for increased transparency and have meaningful dialogue about business performance that builds relationships and trust.

The numbers stack up

The sheer scale of its success backs up social media’s attractions as a dynamic route to established and new markets and communities of all kinds. If Facebook were a country, it would be the world’s third biggest after China and India. It took television 13 years to reach a worldwide audience of 50 million; Facebook took only three years from its founding to pass this milestone and in October 2012 it had more than 1 billion monthly active users.

While digital factoids make for lively and entertaining infographics and YouTube presentations, the big story is what this says about everyday consumer and investor behaviour and expectations. Online sources and communities have become go-to sources of information. For example, 78% of consumers trust recommendations from their peers while only 14% trust advertisements, and 88% of customers are very likely to use the internet to research financial products. Closer to home for corporate reporters, around 50% of professional investors in the US regularly use blogs and follow each other on Twitter and StockTwits, and more than 60% of institutional investors say that social media will become increasingly important to them.

Let’s talk about risk

Global CEOs also expect that social media will prompt a ‘significant change’ in their strategy, according to PwC research. US corporations are leading the way in social media use – some 365 of the Fortune 500 have active Twitter accounts while 22 of the FTSE 100 are yet to send their first official tweet, and follower numbers for most active corporate accounts on the index remain low.

What’s holding them back? Paradoxically, the high visibility and mass market appeal of social media may be a turn-off in a corporate environment dominated by concerns over governance and risk management. The main reasons for not establishing an active social media presence focus on: potential misuse of the medium (by employees or others); cyber security threats to company systems; and reputational damage either through online attacks or from lack of experience.

But the risks of not joining the conversation are even greater. For a start, people talk about organisations whether they participate or not, which leaves a choice: take part in these conversations or let others control your brand. Sticking to just traditional mechanisms and channels to try and control your message doesn’t work any more – people expect richer interaction.

Second, online and mobile communities are, potentially, rich sources of goodwill and positive energy. You can amplify key messages at relatively low cost compared with traditional media. Ask yourself: can my company compete effectively if it doesn’t sharpen up by using this channel for meaningful dialogue with customers, partners and staff?

And finally, social media is already an established channel for recruiting and managing the talent that will take organisations forward. Vibrant social media networks are a key enabler of innovation and efficiencies that have a direct impact on business results. Again, deciding not to take part looks increasingly like life in the slow lane.

Into the unknown or a step ahead?

Even companies that accept the case for social media may balk at the commitment involved. Social media is no different from any other strategic initiative: a good starting point is to have a realistic idea of what can be expected from the experience, in terms of both the potential benefits and the necessary level of investment. A social media programme is not a small undertaking – once started it needs continual care and attention to stand a chance of meeting the expectations of its audience.

While some sectors are further ahead than others in embracing social media, the overall level of maturity of B2B (business-to-business) organisations is still quite low – with a few notable exceptions. Successes that B2C (business-to-consumer) organisations have had with social media hold lessons for their B2B counterparts. There is a real opportunity for progressive B2B organisations to emulate global leaders and differentiate themselves from their competition.

Bringing reports to life

Corporate reporting, investor relations and other stakeholder communications are as yet relatively under-used topics of social media conversation. Traditional reporting may be changing, but its regulated mix of compliance data and set formats has not readily lent itself to the more dynamic, two-way and free-form arena of social media. Even the best corporate reports are more likely to provide answers than to invite questions and start building relationships.

Understandable concerns are frequently voiced over the speed with which market-sensitive data can be leaked and the difficulties of policing comment on company blogs and social media accounts.

But in today’s mobile and connected world, business audiences and buyers expect higher levels of engagement and richness in their interactions with other businesses. A corporate website alone will not meet all their information needs, and companies should look to other digital channels to build dialogue.

Periodic, formal reports and market updates issued as broadcasts are necessary but can look increasingly like blunt instruments compared with direct engagement with specific online communities. Investing in social media (in a planned and measured way) is increasingly becoming a test of corporate commitment to building the rounded picture of the organisation demanded by key stakeholders. And it will open up more opportunities than even the best collection of corporate reports.

Being social makes better business sense

Dominic Jones, writing in the IR Web Report, in the US said:

Company disclosure channels that once seemed innovative – such as investor relations websites, webcasting and PR wire services – are struggling to stay relevant as investors grow accustomed to receiving information from companies in real-time on their favourite social networks in formats that are easier to access and use. These changes are irreversible.

Social media offers better user experience

Facebook now features prominently in [aluminium giant] Alcoa’s corporate reporting. The company’s page on the giant social network [is] transformed on the day of its [quarterly earnings] into a frequently updated feed of new information that its almost 14,000 followers are able to comment on and share with their friends, things they cannot do on the company’s corporate website.

Alcoa also uses the company’s Twitter account to provide links to the earnings release, earnings call webcast and the company’s investor presentation, which was posted on the SlideShare presentation sharing service. The company also highlighted key facts and quotes from its release for its 2,600 Twitter followers.

I can’t say this loud enough: social media is now mainstream, and companies that haven’t yet started using social media in their investor relations programmes are in danger of finding themselves talking to increasingly smaller audiences.